Do NOT “Follow Your Dreams” and Start a Non-Profit!
“Follow your dream!” is America’s most ubiquitous advice. Google it, and 10 MILLION stories populate.
This isn’t surprising. Dreams mean doing what we love so we can “never work again.” And who wants to work? Plus, look at all the authors making millions following their dreams of selling us books on following our dreams. What’s the alternative? Accounting?
But underpinning the pursuit of each dream is a consumerist strand used to sell cosmetics and cars — “Aren’t you worthy of this?” “Well, of course, I am!” we say, imbibing finely brewed narcissism with a double shot of amnesia that erases the sad souls who followed their dreams into nationally-televised self-immolation on America’s Got Talent.
I get dream hunger. This essay is me pursuing my dream of making larger points through satire. It’s why I blurt “follow your dreams” in response to everything from “I’m making eggs!” to “I’ve decided to disrupt the telecom industry!” I don’t ick your wows.
UNTIL…you say “I’m starting a non-profit.” Then I dig in. YOUR dream…can cost people who need help.
I’ll Grant You That!
Members of Congress pen glowing letters for non-profits seeking federal grants. As district director for a U.S. House member, I used to meet with constituents with “new ideas” for non-profits, and without fail, every conversation had an identical trajectory:
Me: “Candid question…you doing this to feel a sense of purpose, for recognition, elevated profile, or a new job? Or is this about the mission — you want people to get what this non-profit will deliver?”
Idealist: (Without ANY hesitation) “The mission.”
(Sidebar: It’s ALWAYS the mission).
Me: “Great! Another non-profit within a mile does nearly the same thing, and I bet they’d love this.”
Idealist: (Reframing) “But our program is different because (insert differences that weren’t really).”
Me: “Great! I’m sure they’ll adapt if this improves their work. Tell (Executive Director) I said it’s terrific and leave them the particulars so they get it right.”
Idealist: (Reframing yet again) “But (me/my team) have the (connections/skills/knowledge) to run this.”
Me: “Great! Connect them to your network and let them know the kind of program manager they’ll need. If you’re truly the only one who can do it, I bet they’ll hire you. Or you can see if they need Board members so you can keep an eye on it. Anything else?
Idealist: (Looking deflated and dumbfounded).
And so would end the lesson.
I’d help them a thousand ways thereafter, of course, but it was crucial to know their true motivation as a starting point and, more importantly, for them to know it.
Don’t get me wrong. Without true non-profit entrepreneurs, we’d lack innovative organizations like Creative Commons, Teach for America, Doctors Without Borders, all manner of health and environmental advocacy groups, 916 Ink (a non-profit whose board I’m on that helps youth find their voices and turns them into published authors), and countless others.
“So why are you harshing my vibe, Bro?”
First, there are 1.3 MILLION non-profits in the U.S., so, yeah, I’m kind of skeptical you’re non-profit Amazon. You aren’t alone in working with victims of domestic violence or providing mentorship to kids. By the way, since 2000, we’ve seen a 75% rise in the number of non-profits. What percent of that explosive growth is driven by unmet needs versus the laudable (but possibly harmful) desire of people to “create a non-profit to make a difference”?
America needs to consolidate non-profits, not add to their ranks.
Non-profits spend $2 trillion annually with $826 billion on personnel. Yes, you have to pay people to deliver impact, but two executive directors cost more than an executive director hiring you as a program manager (or you just handing over your idea).
My jeremiad is against wasted dollars and time — by which I mean any cent or second unnecessarily spent to provide neither relief nor a life skill to a human, animal, mineral, or vegetable (for my people at the Food Literacy Center). And any expense of time and money you incur that another organization could have avoided is definitely that. Wasted.
We often look at “administrative costs,” the percent of a non-profit’s budget spent on non-program services, to assess how “efficient” a non-profit is, but there’s a shell game at play. A massive non-profit with 1% admin will spend twice what a small one with a 40% admin budget will. For this reason, I won’t even try to quantify your expected waste should you move forward.
I’d just ask you to say out loud “I just took ($X and/or Y hours of direct care) away from the very people I wanted to help” every time one of these applies to your prospective venture:
Legal and Accounting. Just the filing fee to set up a non-profit with the IRS is between $275-$600. You have to incorporate, create board governance documents, bylaws, policies and procedures, and if you hire anybody, an HR manual, and if you hire a lot of somebodies, probably another employee with the expertise to handle your payroll and tax forms, and these are the most basic obligations.
Information Tech. What about your technology platforms, software licensing, document storage and retrieval, web security, and confidentiality of data?
Insurance. My HOA has a $300,000 budget, and we pay $6g in liability insurance with NO employees. What will you pay, especially if you work with kids? Even non-profits with volunteers exclusively need abuse and molestation policies. How many girls could we teach to code for $6g?
The Office. What about rent and utilities? I bet the non-profit that could absorb your idea has empty cubes right now, which means they’d need less space than you. But if I’m wrong, a marquee tenant has per square foot bargaining leverage you probably don’t. And if I’m wrong yet again, how many hours will you spend finding space and negotiating for it? How much will your lease review cost? Oh, you have a friend who is a law firm partner?!? So instead of him donating the $400 he could have billed in that hour to Habitat for Humanity, he reviewed the lease for your new housing non-profit? Oh, cool, cool, cool, cool, cool, cool, cool!
Fundraising. Thirty-seven percent of small non-profits (less than $50,000 in annual receipts) report “no” fundraising costs, and the same is true for 25% of those with between $1 to $5 million. But among those that do, numbers can hit 10%. So let’s just say America’s non-profits collectively spend 1% of their total budget on money chasing. Yeah, that’s $20 BILLION.
Of course, fundraising costs are largely meaningless because most non-profits only include things like direct mail (paper and stamps) and grant writer contracts. Many don’t fold in salaries and benefits of their PR/marketing/ communications and external affairs teams, even though your social media, TV coverage, e-newsletter, website, annual report, events, and even 95% of the events you would attend as an executive director are intended to build brand identity, community awareness, and mission support…to one end only: C.R.E.A.M., dolla, dolla, bills, ya’ll.
[I’ve had non-profit friends quibble about this until I ask if they’d accept $1 billion from Warren Buffet if his only condition was their non-profit could NEVER tell anybody except its staff and volunteers what it was doing (and Warren would provide unlimited customers). Nobody says no. Once the money is secure, NONE of the rest matters].
But you still want to do this because you’re confident the wasted hours will hit pay dirt, and you’ll get the money you need to operate and grow. Congratulations! Your success will almost certainly hurt people!
You‘ll say you’re eyeing NEW money, and America IS generous. In 2018, individuals donated $292 billion, corporations gave $20 billion, and foundations gave $75 billion. But what are the chances foundations, corporations, and individuals ramp up their budgets instead of “spreading the wealth around?” (There was also $39 billion in honored bequests in 2018, but good luck getting those folks to redirect their money now).
And if you’re thinking about providing services on contract, know that 80% of ALL non-profit revenue comes from the government, so you’re breaking out a spoon and fork on the biggest non-profit pie that is shrinking.
“Yeah, but we’ll be all-volunteer!” Even if you intend to do so indefinitely, what about the 100 hours in the aggregate you just had five people spend to build a fundraiser instead of helping five adult readers go up a grade level?
And I’m even crediting you with maximum efficacy, not “toxic charity,” a controversial phrase coined by urban activist Robert Lupton that broadly means actual program spending that costs too much while failing to make a real-life transformation. As an example, Lupton cracks on a church for spending $30,000 to send a bunch of people on a mission trip to another nation to build a house when sending one instructor to help that community build its own would have cost $2,000. I think we can agree that’s not a non-profit operation; that’s a vacation with some philanthropy garnish (and maybe even some white savior salt for flavor).
If you have not researched every organization in your area that could possibly do what you seek to accomplish and provided them your idea with an offer of assistance to bring in all the volunteers and other resources you can marshal, you’re definitely in it for the mission.